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The service helps lenders prevent errors in mortgage loan files which could lead to costly buy-backs, delayed closings and much more.

According to Freddie Mac, it received $2.7 billion from lenders on repurchases during the first half of 2010, more than a 50 percent rise from the same period last year. As a result, lenders have increased their focus on quality control to avoid costly errors in the loan origination process. Errors can stem from misrepresentation of borrower income, employment and pay stubs; overstatement of appraisals; as well as errors and omissions.

“Constantly evolving regulatory and financial needs demand exclusive focus on compliance, frequent training and knowledge management,” said Niraj Patel, president of ISGN. “Loan buybacks can significantly impact a mortgage lender’s bottom line. Therefore it is crucial for lenders to frequently audit the quality of their loans, and reps and warranties so they don’t suffer any unanticipated financial hit.”

Government organizations such as FHA/VA and the government-sponsored enterprises (GSEs) have mandated several quality assurance methods including qualified staff, exclusive resources for QA, strict adherence to regulations and timelines, adequate scope and sampling, reporting, and corrective actions.

ISGN’s Loan Quality Audit and Monitoring Service is a comprehensive service that addresses ever-changing regulations and ensures compliance. It includes quality assurance plan review and creation, desk appraisal assessment, underwriting evaluation, compliance review, third party re-verifications, credit report reviews, field appraisal reviews, pre-funding quality control, and post-closing reviews. Red flag reviews are conducted on all loans to identify indicators of fraud or misrepresentations. Loans to be reviewed are selected using statistical, discretionary and targeted sampling.

“One of the advantages that we bring is our experience with underwriting and mortgage processing. Our quality assurance team has numerous years of experience and can incubate these processes quickly for clients,” said Patel.

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